Daily Stock Market Update & Forecast – November 20th, 2017

- State of the Market Address:

  • The Dow remains well above 23,000.
  • Shiller's Adjusted S&P P/E ratio is now at 31.51 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
  • Weekly RSI at 77 - overbought. Daily RSI is at 59- neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 18,300 today (on weekly).
  • Weekly Stochastics at 90 - overbought. Daily at 48 - neutral.
  • NYSE McClellan Oscillator is at +3. Neutral.
  • Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest declined slightly to 75K contracts net long. 
  • Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning back to net short. Short interest has shifted slightly lower during the week. For now, the Dow is 7X, the S&P is at 2X net short, Russell 2000 is now at 5.5X net short and the Nasdaq is net neutral.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the "smart money" is positioning for some sort of a sell-off.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

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Trade Of The Day – The Japanese Yen (JPY)

The Japanese Yen has been compressing into a massive long-term wedge over the last 6 years and it is getting exciting. With the wedge terminating over the next few months, the next move in the currency will be massive. Up or down. This move, of course, will have significant impact on the US stock market. If you would like to find out which way this powerful compression will break and when, please Click Here.

This Shockingly Simple Metric Confirms – The Stock Market Is Incredibly Overpriced

In today's environment bulls and bears can argue until the second coming of Jesus about whether or not today's stock market is overpriced. Taking all sort of shortcuts and coming to questionable conclusions in the process.

The chart above is rather self explanatory. Today it takes 115 hours of wages to buy 1 share of the S&P 500. No fudging numbers, no complex formulas and no human error. The highest level in recorded history. Higher than 1929, 2007 and even 2000.

And while the bulls would argue today's low interest rates justify the above valuations, nothing could be further from the truth. But who am I to tell you not to pay extravagant prices for today's below average debt inflated earnings.

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Is Gold Testing Resistance Just Prior To A Massive Run Up – Trade Of The Day

We have discussed the chart above many times before. As is evident, Gold was tracing out a massive long-term compressing wedge/triangle. Breaking out of it to the upside over the last few weeks. Since then Gold has retraced its move up to test prior resistance (upper red line). Traditional technical analysis suggests that as soon as this test completes, Gold will be ready to fly to the upside. Is it that easy or is something much more sinister is in the works? To see our entire Gold analysis please Click Here

FED’s Stupidity Or Incompetence Is Beyond Belief

Sometimes I read something that really gets my blood boiling. Here is the latest from the Ponzi Operators who are literally running our country into the ground.

Evans Says Fed Must Convince Public It Will Allow More Inflation

“In order to dispel any impression that 2 percent is a ceiling, our communications should be much clearer about our willingness to deliver on a symmetric inflation outcome, acknowledging a greater chance of inflation at 2.5 percent in the future than what has been communicated in the past,” he said in remarks prepared for a speech in London.

“I am concerned that persistent factors are holding down inflation, rather than idiosyncratic transitory ones,” Evans said, citing declines in various measures of inflation expectations in recent years.

“By and large, central bankers are conservative types who view their most important task as preventing an outbreak of 1970s-style inflation,” he said. “So perhaps then it’s not surprising that we as a group have not convincingly demonstrated to the public our commitment to a symmetric inflation target.”

Excuse my language, but these so called "smart guys" are f#*$ing morons in suits. 

I am not sure how many times I have to repeat myself here, but here we go. The FED is wondering where in the world inflation is after pumping Trillions of dollars into the economy through zero interest rates and QE.

The inflation they seek is responsible for blowing up historic bubbles of unbelievable proportions in the stock market, the bond market, the art market, the real estate market, Bitcoin, etc....

Basically, all speculative assets. 

The debt they have created doing so is deflationary in nature. That is why the real economy cannot get inflation going. As has been the case in Japan. What's worse, when the velocity of credit runs out, the overall economy will slip back into a deflationary spiral. As bad debts will have to be liquidated.

The only way to avoid a deflationary collapse is  through outright monetization. And while slow erosion of the dollar sounds good in theory, any sort of a violent adjustment there can end up being far worse than a deflationary collapse.

Idiots, idiots I tell you!!! 

If you would like to find out exactly what happens next based on our Timing and Mathematical work, please Click Here. 

Trade Of The Day – Junk (HYG)

We have been following the chart above and its compressing wedge for quite some time now. As is evident, the wedge was broken to the downside. Suggesting that a much bigger move down is in the works. And that what has so many people worried. Not only about the bond market, but also about the health of the overall stock market. Will this breakdown continue or is this a false break? To find out please Click Here. 

Trade Of The Day – US Dollar (DXY)

Most market commentators and investors believe the USD has bottomed in early September. And while that might very well be the case, the overall setup is not that easy. In addition to a powerful TIME turning point arriving NOW, the USD has been unable to push above prior support (red line). That is net bearish in itself. If you would like to find out what the USD will do next and when, please Click Here

Trade Of The Day – OIL (CL)

Is oil breaking out? As the chart above suggests, Crude Light has broken out of its longer-term compressing wedge. The break is clear, suggesting much higher prices ahead. Yet, it might not be as easy as that. A much more powerful resistance level lies just ahead and if oil is unable to break above it, much lower prices are ahead for the commodities. That is exactly what we talk about in our membership section. To learn more, please Click Here